Amgen Inc. v. Connecticut Retirement Plans and Trust Funds
133 S. Ct. 1184
SCOTUS2013Background
- Connecticut Retirement filed securities-fraud suit against Amgen and officers; sought class action under Rule 23(b)(3) relying on fraud-on-the-market presumption from Basic.
- Amgen conceded market efficiency and public nature of misstatements; acknowledged NASDAQ market for Amgen is efficient.
- District Court certified a Rule 23(b)(3) class for all investors who bought Amgen between first misrepresentation and last corrective disclosure.
- Court of Appeals (Ninth Circuit) affirmed certification and rejected materiality prerequisite at certification.
- Issue presented: whether materiality must be proved to certify a fraud-on-the-market class under Rule 23(b)(3).
- Court holds materiality need not be proven at certification; materiality is a common, objective question and failure to prove it at trial ends the merits, not individual questions; certification affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Materiality required at certification for 23(b)(3)? | Connecticut Retirement says materiality must be proven to enable fraud-on-the-market reliance. | Amgen argues materiality is prerequisite to class predication of predominance. | No; materiality not required at certification; predominance can be shown with common questions. |
| Should rebuttal materiality evidence be considered at certification? | Rebuttal evidence about materiality should be considered later, not at certification. | Rebuttal evidence could negate materiality and undermine common questions. | Rebuttal evidence on materiality need not be considered at certification; its relevance arises on merits or summary judgment. |
| Predominance and fraud-on-the-market predicates must be proved pre-certification? | Basic presumption allows class-wide reliance if predicates exist; timing not strictly pre-certified. | Materiality and market predicates should be proven before certification to ensure predominance. | Not required to prove all predicates pre-certification; materiality is a common question and failure ends merits, not individual trials. |
Key Cases Cited
- Basic Inc. v. Levinson, 485 U.S. 224 (1988) (fraud-on-the-market presumption for class actions; materiality essential to theory)
- Erica P. John Fund, Inc. v. Halliburton Co., 563 U.S. 804 (2011) (discusses reliance and fraud-on-the-market framework)
- Halliburton Co. v. Erica P. John Fund, Inc., 563 U.S. 804 (2011) (recognizes proof of reliance must be shown; contextual background for at-issue standard)
- Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) (rigorous class-certification requirement; no merits inquiry beyond necessity)
- Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27 (2011) (enumerates elements of Rule 10b-5 claim; reliance element acknowledged)